Dan Hodges is a former Labour Party and GMB trade union official, and has managed numerous independent political campaigns. He writes about Labour with tribal loyalty and without reservation. You can read Dan's recent work here

The Cuts-Finder General is coming. Labour supporters should be scared – and thankful

Balls will on Thursday instruct colleagues to start identifying spending cuts in a zero based spending review which he says will help a Labour government "put Britain’s budget back into surplus”. It adds, “The shadow chancellor insists that the exercise will be “tough” and look at spending in every department, including the NHS, as he tries to counter Conservative claims that Labour lacks the discipline to eliminate the deficit.

Which is welcome news to those of us who have long been arguing economic and fiscal credibility are more fundamental to Labour’s election chances than a pledge to cut £5.80 a month from people’s fuel bills and an endorsement from Hugh Grant.

But although Balls has initiated the zero-cost spending review, he won’t in fact be conducting it. That task has fallen to Chris Leslie, shadow chief secretary to the Treasury. Or, as he will be known from now on, Labour’s Cut-Finder General.

Up until now Leslie has enjoyed a relatively low profile. In Labour circles he’s still probably best remembered for the time he took his seat for the first parliamentary session following his party’s landslide victory in May 1997. Sitting on the front bench, Tony Blair surveyed the massed ranks of his parliamentary intake and then lent over to Gordon Brown. “It’s weird,” he said “but there’s a guy back there who’s the splitting image of the boy who does your photocopying.” “That is him,” Brown replied. “He’s your new MP for Shipley”.

Leslie’s job is no longer to do the photocopying, but to count the photocopiers. And the pens and the paper clips.

His initial efforts to identify spending cuts will fall back on that old Westminster trick, the efficiency drive. Leslie has already told Balls he’s confident significant savings can be found from within the bloated Whitehall bureaucracy. During the election David Cameron made great play of his mantra: “Is it really that hard for government to manage to find a saving of £1 for every £10 it spends?” Leslie’s job will be to ensure that for every £10 his colleagues plan to spend he finds another pound stuck down the back of the shadow cabinet sofa.

That will not be an easy task. One thing already worrying the Cut-Finder, as he loads up his manacles and ducking stool, is the knowledge his Conservative opponents will be attempting to sabotage him at every turn. Labour’s Treasury team is already sceptical about the Departmental spending totals issued in June’s CSR. And they know from their own experiences of both opposition and government how difficult it is to draw up comprehensive spending plans without access to the detailed figures.

But they’re also aware that the politics of the moment dictate cuts will need to be identified. Real cuts.

The job of finding them will be broken down into three distinct phases. Between now and April, Leslie will be sitting down with the heads of each of the shadow departments to select areas where savings can be made. First that will involve breaking down the barricaded doors of their offices in a series of scenes reminiscent of the climax of The Shining. There will then be a period of identifying “soft cuts”, the small but newsworthy areas of departmental waste that can be used to embarrass ministers, and ease the pain of the process. Then the serious business of identifying the “strategic savings” will begin. This will be based upon four or five key spending principles: does the expenditure represent genuine value for money; does a particular spending stream help promote a fairer society; does it help generate sustainable growth and investment; does it represent early intervention spending that could generate savings over the longer term.

Once the process has been completed, and with the pitiful screams of his colleagues still ringing in his ears, the Cut-Finder General will present his findings to Ed Balls and Ed Miliband. And at that point the hard decisions about where the axe will fall will finally be taken.

This process will continue throughout the summer, with the aim of having agreement and sign-off by the time of the 2014 conference. It’s then that the relevant expenditure decisions will be fed into the policy review process, and finally the manifesto.

At least that’s the plan. As Labour sources acknowledge, any process of this kind conducted outside of government will necessarily be broad brush. “For this to work properly it will have to be gone over with a fine-toothed comb by the civil servants,” one shadow cabinet adviser admitted.

Then there is the inevitable reaction of the shadow cabinet itself. As Andy Burnham proved during the summer with his plans for integrating long-term health and social care, when pet projects are blocked by the Treasury team they have no compunction about running directly to Ed Miliband, and if that fails to the press and the wider Labour movement.

Then there is the role Balls and Miliband will have to play in the process. Balls has told friends he appreciates the time for ducking the hard choices is over. “Our job is simple. We have to convince people we care about public money more than the Tories do,” said an ally. Where Miliband stands on all this is less clear. To date he has been willing to talk about the need for tough decisions, but rather less inclined to actually take them.

Labour’s “iron” spending principles also seem to be suspiciously flexible. There are very few spending streams that don’t contain at least some element of value for money over the long or short term, some social benefit, or some form of growth stimulus.

But while this plan for regaining Labour’s reputation for fiscal credibility has its flaws, at least there is now a plan. And having embarked on a high-profile process of identifying strategic savings, Ed Balls and Ed Miliband are going to have to deliver some.

The Cut-Finder General is coming. Every Labour supporter should be afraid. And thankful.